Market Trials DAM/RUC/SASM Weekly Update August 13, 2010 http://nodal.ercot.com 1

Antitrust Admonition ANTITRUST ADMONITION ERCOT strictly prohibits Market Participants and their employees who are participating in ERCOT activities from using their participation in ERCOT activities as a forum for engaging in practices or communications that violate the antitrust laws. The ERCOT Board has approved guidelines for members of ERCOT Committees, Subcommittees and Working Groups to be reviewed and followed by each Market Participant attending ERCOT meetings. If you have not received a copy of these Guidelines, copies are available at the Client Relations desk. Please remember your ongoing obligation to comply with all applicable laws, including the antitrust laws. DISCLAIMER All presentations and materials submitted by Market Participants or any other Entity to ERCOT staff for this meeting are received and posted with the acknowledgement that the information will be considered public in accordance with the ERCOT Websites Content Management Operating Procedure. http://nodal.ercot.com 2

Agenda DAM/ RUC/SASM summary QSE Activities for Next Week General Reminders/Updates Environment Report Outages Known Issues Special Topic Question and Answers / General Discussion Appendix ERCOT asks that Market Participants log into the WebEx session using their company name and then their name. This will allow ERCOT to take roll-call offline. http://nodal.ercot.com 3

Market Trials 2010 Roadmap http://nodal.ercot.com 4

Submission Overview for Monday August 9 DAM submission overview 194 QSEs participated for Op Day 8/10 Energy Bids in the range of 48,650 to 91,188 MW per hour Cleared 34,235 to 52,133 MW energy per hr Cleared 13,366 to 16,490 PTP bids per hr Four major Load Zone prices ranged from $39.81 to $500.00 Energy cleared 79.5% to 107.5% of the forecasted load. http://nodal.ercot.com 5

Submission Overview for Tuesday August 10 211 QSEs participated for Op Day 8/11 Energy Bids in the range of 48,299 to 97,924 MW per hour Cleared 33,843 to 49,206 MW energy per hr Cleared 12,981 to 16,213 PTP bids per hr Four major Load Zone prices ranged from $42.87 to $500.00. Energy cleared 75.2% to 104.4% of the forecasted load. http://nodal.ercot.com 6

Submission Overview for Wednesday August 11 219 QSEs participated for Op Day 8/12 Energy Bids in the range of 53,620 to 105,259 MW per hour Cleared 39,068 to 57,031 MW energy per hr Cleared 12,057 to 15,300 PTP bids per hr Four major Load Zone prices ranged from $36.02 to $500.00. Energy cleared 86.9% to 113.7% of the forecasted load. http://nodal.ercot.com 7

Submission Overview for Thursday August 12 214 QSEs participated for Op Day 8/13 Energy Bids in the range of 49,166 to 98,093 MW per hour Cleared 39,724 to 57,161 MW energy per hr Cleared 11,254 to 14,254 PTP bids per hr Four major Load Zone prices ranged from $31.97 to $500.00. Energy cleared 86.0% to 116.8% of the forecasted load. http://nodal.ercot.com 8

RUC Execution Overview for this week RUC overview for the week: http://nodal.ercot.com 9

Next Week’s Activities Next week – Op Days are 8/17 – 8/21 DAM executing on 8/16 – 8/20 8/16, 8/17 No guardrails - Bids/offers should be reasonable COPs should reflect Nodal prior to DRUC run. We are requesting COP updates as a result of the nodal RUC processes. Operational Scenarios: AS Insufficiency De-Commits 8/18 and 8/19 and 8/20 COPs should reflect Zonal During the LFC Test. Week 16 Note: Dates are DAM execution days 8/16 – 8/20 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Nodal during Non-LFC days Zonal during LFC days DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios AS Insufficiency De-Commits http://nodal.ercot.com 10

Next Week’s Activities DRUC executing after DAM WRUC, HRUC and SASM executing on 8/16-8/20 HRUC and SASM WRUC executing on Monday and Wednesday HRUC will be executed at 1 pm (target Operating Hours will be the balance of the Op Day) May be run for additional, non-supported hours SASM will be opened for the AS insufficiency operational scenario Week 16 Note: Dates are DAM execution days 8/16 – 8/20 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Nodal during Non-LFC days Zonal during LFC days DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios AS Insufficiency De-Commits http://nodal.ercot.com 11

Week of Activities 8/23 – 8/27 Next week – Op Days are 8/17 – 8/21 DAM executing on 8/16 – 8/20 No guardrails - Bids/offers should be reasonable COPs should reflect Nodal prior to DRUC run. We are requesting COP updates as a result of the nodal RUC processes. Operational Scenarios: RUC Simulation Week 17 Note: Dates are DAM execution days 8/16 – 8/20 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Reflect Nodal DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios RUC Simulation http://nodal.ercot.com 12

Week of Activities 8/23 – 8/27 DRUC executing after DAM WRUC, HRUC and SASM executing on 8/16-8/20 HRUC and SASM WRUC executing on Monday and Wednesday HRUC will be executed at 1 pm (target Operating Hours will be the balance of the Op Day) May be run for additional, non-supported hours SASM will be opened for the AS insufficiency operational scenario Week 17 Note: Dates are DAM execution days 8/16 – 8/20 Objective Network Constraints Included DAM 5x week DAM submissions No guardrails COP Updates Reflect Nodal DRUC W/ each DAM HRUC Limited WRUC 2 x week SASM As needed Op Scenarios RUC Simulation http://nodal.ercot.com 13

Scenarios to run in August VDI Commitments and VDI RUC Cancel August Scenarios Scenarios to run in August VDI Commitments and VDI RUC Cancel Rescheduled to align with settlements integration AS insufficiency – Tues next week HRUC for some Ancillaries (additional on existing unit or commit unit) Execute a SASM Aug 10 15-19 Aug 11, 15-19, 18-20 De-commitments – Tues next week Requests MarketTrials@ercot.com RUC Simulation ERCOT open to working with companies to align RUC instructions with zonal resource commitments Additional Scenarios in the future under discussion…….. Stress test No DAM, procure AS through SASM http://nodal.ercot.com 14

General Reminders/Updates Network Model Update An updated settlement points and MP short name list was posted for the 8/3 load at http://nodal.ercot.com/readiness/markettrials/index.html Next scheduled load will be installed 8/18. Reminder regarding External Interfaces Specification v1.19N Posted at http://nodal.ercot.com/readiness/sandbox/index.html Delivered 7/22 ERCOT will be continuing to run WRUC Please be aware that WRUC requires valid COP data seven days out in order to have a good solution during the study period ERCOT will continue to announce on the Market Call the operating days for the next week ERCOT posted the contingency lists for DSV20 and DSV21 http://nodal.ercot.com/readiness/markettrials/index.html http://nodal.ercot.com 15

General Reminders/Updates DAM Deep Dive Conf Call being conducted 2x/week Interested parties and Nodal PMs were invited based on Deep Dive meetings earlier in the month Issues being tracked on spreadsheet (posted with this presentation) Focus on: Addressing specific data issues (eg, constraints, SPS/RAP, Contingencies) Detailed questions on certain prices/solution Testing DAM solution (stress testing) Participants are MP SMEs focused on details of DAM solution http://nodal.ercot.com 16

Day-to-day operations summary: Planned / Unplanned Outages of Market Trials 08/13/2010 6:00 P.M. – 08/13/2010 9:00 P.M Application patch deployments are planned in the Nodal production environment and will affect services rendered by the following systems: Market Manager UI MMS CRR 08/13/2010. MIS Portal will be intermittently down for system upgrades. This will affect access to reports as well as links for launching the various Nodal applications. Unplanned Outages 08/09/2010 8:00 A.M. – 08/10/2010 10:30 P.M User experienced issues with downloading reports via MIS Portal and through the URLs provided by the EWS Get Reports service. An incorrect application configuration was identified as the root cause of the issue. 08/09/2010 10:00 A.M. – 08/09/2010 10:30 A.M Intermittent issues with receiving BidSet acceptance messages were noted on the Market Manger application. Root cause analysis is underway. 08/09/2010 08:00 A.M. – 08/09/2010 10:00A.M Users were unable to submit CRR offers into Day Ahead Market due to data transfer issues between the CRR and MMS applications. http://nodal.ercot.com 17

Environment Report-Known Issues Full DAM/RUC/SASM known issues list will post every Friday night at http://nodal.ercot.com/readiness/markettrials/dam/index.html New DAM/RUC/SASM known issues The transfer of CRR ownership information to the Market System was not working correctly on 8/9 and 8/10. This prevented some participants from submitting offers. This was corrected on the afternoon of 8/11 and has not encountered any other problems. Deactivated contingencies in DAM: SAMGJEW8   SSD5SND8 SSD5SDS8 S_2073 DELKMLS5 DFORFRN5 http://nodal.ercot.com 18

Environment Report-Known Issues Closed http://nodal.ercot.com 19

Q&A Q&A / Open Forum http://nodal.ercot.com 20

Pre- and post-DAM reports Special Topics Appendix Appendix AS Info for the week Pre- and post-DAM reports Special Topics http://nodal.ercot.com 21

Submission Overview for August 10 http://nodal.ercot.com 22

Submission Overview for August 11 http://nodal.ercot.com 23

Submission Overview for August 12 http://nodal.ercot.com 24

Submission Overview for August 13 http://nodal.ercot.com 25

Note: Other All transactions will be supported. Trade submission and confirmation (Energy, Capacity and AS Trades) may be exercised at this time. DAM notifications will be active. Phase 2 Validation process will be active and supported. QSE transactions that do not follow the guidelines are subject to cancellation at ERCOT’s discretion. ERCOT may run DAM on non-supported days. No QSE participation is requested, and ERCOT staff will not be available to answer questions regarding the outputs of these non-supported processes. CRR information from the market trials auction will be integrated into the market system. CRR Offers (by NOIEs) must contain CRR IDs from this auction in order to be valid. http://nodal.ercot.com 26

Ancillary Services (AS) Plan Report Postings Posted by 6 am: Ancillary Services (AS) Plan Load Ratio Shares (these will be static based on Zonal production data as of October 16, 2009) * AS Obligations * Wind Generation Resource Power Potential (WGRPP) forecast * and Aggregated WGRPP forecast List of all Settlement Points and the mapping to Electrical Buses Load forecasts for ERCOT system, Weather Zones and Load Zones Load forecast distribution factors Distribution Loss Factors and forecasted Transmission Loss Factors Weather assumptions   * Denotes MIS Certified reports http://nodal.ercot.com 27

DAM Clearing Price for Ancillary Services (MCPC) Report Postings Posted after each DAM: Awards (AS Offers, Energy Offers, DAM Energy-Only Offers, DAM Energy Bids, CRR Offers, and PTP Obligation Bids) * DAM Clearing Price for Ancillary Services (MCPC) Day-Ahead hourly Settlement Point Prices (SPPs) Day-Ahead hourly Locational Marginal Prices (LMPs) Shadow Prices Quantity of AS Offers Aggregated AS Offer Curve Total quantity of energy (in MWh) bought and sold in DAM See DAM Handbook for a list of all DAM/RUC/SASM reports available starting in Phase 4.0 - http://nodal.ercot.com/readiness/markettrials/dam/index.html. See MIS Handbook for a comprehensive list of reports available - http://nodal.ercot.com/readiness/markettrials/mis/index.html. * Denotes MIS Certified reports http://nodal.ercot.com 28

Phase 2 Validation reports and process Special Topics Phase 2 Validation reports and process Phase 2 validation re-evaluates all submitted transactions at 7 am in the day-ahead with updated information, such as AS Obligation, CRR ownership, credit limits, etc. If there is a validation error, ERCOT will cancel the transaction We send a notification that a Phase 2 report is available for a particular transactions type, and notification containing the cancellation for the transaction. You can query for the Phase 2 report via web service or on the Reports page of the Market Manager in order to view the reason for the cancellation. Correct and resubmit prior to 10 am. Note that submissions are locked out during the Phase 2 process, which is currently taking about 10 minutes to complete. http://nodal.ercot.com 29

Day-Ahead Self Commitment Special Topics Day-Ahead Self Commitment DAM clearing engine treats your TPO differently if you submit Startup and Minimum Energy (SU/ME) costs as $0 vs. NULL If you submit with SU/ME as $0, DAM engine treats this as a normal offer where the QSE is not requesting SU/ME to be covered. HSL/LSL constraints will be respected. Also, if you are selected for an online Ancillary Service, you will also be awarded at least LSL on your offer curve. If you submit with SU/ME as NULL, DAM engine is signaled to ignore the HSL/LSL constraints for the resource. In this scenario, the offer curve submitted will start at 0 MW and go to the max MW quantity desired – again, DAM will ignore LSL/HSL constraints. If the offer curve submitted doesn’t start at 0 MW, it will be extended to 0 MW by DAM. If the resource is selected for Ancillary Services, no requirement to also award TPO at LSL (since no LSL constraint honored in this case). http://nodal.ercot.com 30

Special Topics Day-Ahead Self Commitment The purpose of the NULL: It allows a QSE to use part of a Resource to serve its own load, and then offer in the rest to the DAM and enable the offer to be co-optimized with its AS Offer. Example: A Resource has 100 MW LSL and 400 MW HSL, and the QSE has already committed 300 MW of the Resource through some other mechanism. The QSE wishes to offer the remaining 100 MW, which would otherwise be ignored due to the 100 MW LSL. Then going into real-time, so QSEs will need to update their TPO to cover the full capacity of the resource, from LSL to HSL, rather than from 0 MW. TPOs for real-time should always cover the entire capacity of the resource to avoid the proxy curve creation. To do the TPO update if the resource is awarded in the DAM, the QSE must provide a reason code, which is DSCM. This functionality came about due to TPTF subgroup on the issue. It has not yet been added to the protocols but will during our protocol traceability/cleanup effort. http://nodal.ercot.com 31

Bid/Offer efficiencies Special Topics Bid/Offer efficiencies ERCOT has identified efficiencies in Bid/Offers submission with regard to the format of submission This applies to all transaction that use a Bid ID or an Offer ID (Energy Only Offers, Energy Only Bids, PTP Obligation Bids, and CRR Offers) Preference is for QSEs to submit the same Bid/Offer ID for each hour in the submission, versus submitting a different Bid/Offer ID for every hour. The market system treats the submission the exact same way, regardless of which format is used Using the preferred format will optimize DAM system performance For xml examples detailing this issue, please view a document that will be posted along with this presentation on the calendar page at http://www.ercot.com/calendar/2010/04/20100409-MT This was discussed at NATF 4/6, we send an email to the nodal technical contacts that we have on file for all QSEs, and we will add it to the External Interfaces Specification http://nodal.ercot.com 32

JOUs and COP consistencies Special Topics JOUs and COP consistencies In DAM, if the different owners of the jointly-owned unit have submitted conflicting COP statuses for the current day, online statuses will overwrite offline statuses when DAM is determining the initial condition of the unit (i.e., is the unit online or offline at the start of the next operating day). In RUC, if the different owners have conflicting COP statuses for the next operating day: If any owner has OUT status for any hour then the unit is considered OUT. If all owners have submitted a COP, and at least one of them has an online status in a particular hour then the resource status for the unit is online (unless any owner has OUT) http://nodal.ercot.com 33

FAQ http://nodal.ercot.com 34 EWS Notification Delivery & Network Firewall Configuration EWS Notification deliveries are currently originating from the following ERCOT servers listed below. To meet system demand and scalability requirements, we will be adding additional servers to this mix. To prevent any service disruptions, as a result of addition of new servers, we recommend your network firewall rules be configured to allow traffic based on address range as opposed limiting them to specific IPs. Current IPs in Play: Data Center Location Internet IP WAN IP Taylor 66.128.17.125 66.128.17.128 192.168.172.126 192.168.172.128 Austin 66.128.16.125 192.168.175.115 Recommended IP Ranges: Data Center Location Internet IP Range WAN IP Range Taylor 66.128.17.0 - 255 192.168.172.0 - 255 Austin 66.128.16.0 - 255 192.168.175.0 - 255 http://nodal.ercot.com 34

Supplemental Materials Reference and Description Location Version External Interfaces Specification http://nodal.ercot.com/readiness/sandbox/index.html 1.19 Explanation of Market Submission Items http://nodal.ercot.com/readiness/markettrials/connectivity/index.html 0.26 Market Manager User Guide 0.06 MMS Requirements http://nodal.ercot.com/docs/pd/mms/index.html#req Various Market Connectivity Handbook 0.97 DAM/RUC Known Issues List http://nodal.ercot.com/readiness/markettrials/dam/index.html N/A Web Services XSDs 1.3.19 Sample Reports, Extracts, and DDLs http://nodal.ercot.com/readiness/reports/index.html DAM ERCOT Operating Procedures 2.0 DRUC/WRUC ERCOT Operating Procedures 0.2 http://nodal.ercot.com 35 Slide 35

Special Topic – Jointly Owned Units JOUs are modeled as a single physical unit DAM uses the separate logical resources when evaluating energy and ancillary services, but Network Security Monitoring (NSM), which is a sub-process of DAM, must consider the physical unit. http://nodal.ercot.com/docs/pd/ida/wp/sgrm/IDA041_White_Paper_for_Split_Generation_Resource_Modeling_v1.doc JOUs offering into DAM Owners offer their share into the DAM separately, but the physical unit must be committed together All owners have to offer in the unit (energy or AS) to the DAM or else it cannot be committed to any owner (one exception for a self-commitment scenario described below). DAM must make a commitment decision about the physical unit, which it cannot do without offers from all the owners. Self-commitment examples (assume three owners) – remember that self-committing by submitting Startup and Minimum Energy Costs as ‘NULL’ (leaving them out of the submission altogether rather than submitting zeroes) signals the DAM software that it doesn’t need to make a commitment decision and to ignore resource constraints. If two owners self-commit (startup/minimum energy costs are NULL) and the other submits nothing, the unit can be awarded without making a commitment decision. If one owner self-commits, another submits a TPO with startup/minimum energy costs, and the third submits nothing, the unit cannot be awarded If one owner self-commits, and the other two submit TPOs with startup/minimum energy costs, the unit can be awarded after making a commitment decision based on the resource constraints and the submitted startup/minimum energy costs. Note that if self-committed, do not submit an OFFNS offer. That offer negates the self-commitment and the DAM software will not consider it as a self-committed resource (since the QSE is requesting ERCOT to evaluate the unit offline) http://nodal.ercot.com 36